Staples is selling a controlling interest in its European operations to an affiliate of private investment firm Cerberus Capital Management for $53.6 million, as the struggling office supplies retailer continues to shift focus to its North American business.
Under a licensing agreement with Staples, the separate, privately held company will still operate under the Staples banner name and other sub-brands in European markets. Its associates will continue to be employees of Staples Europe, which will maintain its headquarters in Amsterdam.
After the sale, Staples will retain a 15% stake in the European business.
The sale was a necessary one for Staples after a tumultuous 2016 that saw the FTC break up its $6.3 billion proposed merger with Office Depot due to antitrust concerns. Longtime CEO Ron Sargent resigned in the wake of the calamity, as Staples had to pay a $250 million termination fee to Office Depot and dial up costs cuts of $300 million by the end of 2018.
Office Depot felt similar ripple effects from the failed merger as well, with CEO Roland Smith retiring at the end of Q1 2017, the company making plans to close an additional 300 stores over the next three years and selling off its own European operations to investment firm Aurelius Group.
Moving On After The Breakup
Reports surfaced in October that Staples was in talks to sell its European stores to Cerberus as the 250+ stores in the region continued to put a dent in any potential profits, driving a 7.2% international sales dip in Q3. In November, Staples sold off its UK stores and operations to Hilco Capital after months of speculation for “nominal proceeds,” with use of the Staples brand expected to be phased out over the coming months.
With the UK sale, Staples’ European unit now consists of retail, contract and online businesses in 16 countries, generating aggregate annual sales of approximately $1.8 billion.
Steven F. Mayer, Co-Head of Global Private Equity and Senior Managing Director of Cerberus, said that the investment firm aims to strengthen the new Staples Europe by:
Expanding its sales force;
Further diversification of products and services beyond office supplies; and
Implementation of next-generation technologies.
“We intend to instill a keen sense of urgency, focus and commitment throughout the entire Staples Europe organization, enhance the company’s competitive position across its markets and channels, and return the business to growth by capitalizing on its many assets, including its well-recognized brands, strong customer relationships, dedicated sales force, advanced distribution and IT infrastructure, comprehensive pan-European footprint, and talented management and associates,” said Mayer in a statement.